We spoke with Joe D’Cruz, Founder and CEO of Catalyze Dallas, about taking established intellectual property and turning it into scalable companies.
Please excuse any typos in this hasty transcript.
Matt Register: Hey guys, welcome back to the show, Texas business Radio. We’re going to continue to bring you innovative companies, innovative business leaders that you need to hear about. If you’re trying to grow your company, if you’re trying to get better, we’ve got some guys here that have figured some things out. We’d love to bring them to you. I’m your host Matt Register. Jay Curry had to step out for a minute. We are here with my business partner George Walden in our investment bank. George what’s going on?
George Walden: Well, this episode we’re bringing to you is about product development. There are a lot of good ideas out there in the marketplace. Unfortunately if you cannot commercialize them, there’s just a good idea that’s eventually going to die. Here’s a person who knows how to get that done in the marketplace.
Matt Register: Well, there certainly are a lot more billion dollar ideas or billion dollar products that never actually make it that far. Right? So it’s easier said than done. Guys, get your calls in 844-814-8144 is our 24 hour call in line. We’re going to get the experts in here to get those questions answered. Let’s jump right into it. Joe D’Cruz is the founder and CEO of Catalyze Dallas. Joe how are you doing? Welcome to the show.
Joe D’Cruz: Yeah. Thanks for having me.
Matt Register: So, tell me about Catalyzed Dallas because this is a very nonstandard business model and I want to learn more about it.
Joe D’Cruz: Okay. So Catalyze Dallas is a, what we call a venture development firm. And what we do is we have a kind of a paradigm shift in commercializing IP for the defense industry and high tech companies. What we do is we put together a very rigorous program. We’ll partner with the client, review their IP. We’ll talk about, you know, people that spent two billion dollars a year on IP.
Matt Register: Right.
Joe D’Cruz: We’ll go through it. We have a team that has a rigorous process and we look to evaluate which, which products they have that have the most potential for a commercial market.
Matt Register: Well and I’ll tell you what, you’re talking about, these are defense contractors, these are firms that are spending billion dollars a year on, billions on, on product development. But there are other applications of that technology they develop beyond what the developed it for. Right?
Joe D’Cruz: Correct.
Matt Register: So, you may have somebody that developed a technology for a military application, yet you can identify a couple of commercial applications for it. And you will then license that and basically create a company. So you are a venture capital fund, except you’re not a venture capital fund. Right? You’re not a fund and you end up building it yourself. Is that…
Joe D’Cruz: Exactly.
Matt Register: Over simplification or is that…
Joe D’Cruz: It’s perfect simplification. What we do is we try and find these products that have already been used in a special purpose.
Matt Register: Sure.
Joe D’Cruz: That we identify, where there’s a much broader commercial market. Usually where there’s been no innovation, so material sciences, alternative energy, transportation, things like that. And we’ll create the market by bringing in executive sponsors and clients. And then we fund the opportunity once we’ve decided it’s, it’s a go.
Matt Register: Well that’s, I love the model. Right? It’s unique, it’s interesting and it’s, it’s very different. And as an investment banker we see products almost daily and opportunities almost daily. That, you know, it becomes pretty obvious when they’re not going to, it’s not going to happen. Right? And it’s nice to see people that have identified ways to, to, to, to increase the odds, right?
Joe D’Cruz: Right.
Matt Register: Of insuring that product goes to market.
George Walden: So, could you take us through an example of this?
Joe D’Cruz: So sure I’ll give you a proof point client. So it’s one of the largest defense contractors in the world. That have been working on a product for about eight years. It’s a drag reduction technology that goes on a very large air frame and they were struggling to do it. So, in October of 2015 they came to us and said “This is the product we want you to focus on”. So what we did was we brought in our team, we went through a pretty rigorous two month go to market research to see, OK, does it work? Is there enough data? Is it supportable? And can we get to revenue quickly? We came out of that and said “Yes”, we made the, went through the legal and completed the transaction. Started the company in August. As part of our due diligence, we had a potential CEO looking at it. She came to us from one of Carlisle’s companies and we launched the company and will have first revenue in less than 12, less than six months and it will be cash flow positive in 18.
George Walden: That’s amazing. One of the things I loved about what you talking to me about was you identified the customer before you ever got into the business. What a terrific model.
Joe D’Cruz: Thanks.Yeah and the benefit for the defense contractors are that this is technology they probably spent four to six million dollars trying to develop over eight years. Their maximum return on that. they would still lose based on how they have to sell.
Matt Register: Well, it’s all mailbox money for them. Right? They, they built it for something else and now this is an opportunity to squeeze additional revenue out of a sunk costs that they’ve already put in. Right? That should be a no brainer for them. Right? So, absolutely remarkable. Now what kind of deals are you looking for now? What space are you operating in now?
Joe D’Cruz: So we have typically try to stay in the material sciences, transportation and alternative energy. So we’re not looking for the, to create a new solar panel. We’re looking for where the gaps are in the marketplace to let, that limit that industry from going faster. But we’ve had now, one of our defense contractors has approached us about getting back in the medical device business and more cybern security and sensor technology because that’s the background of the three founders of the company.
Matt Register: OK. No interesting. Now your background, you’re a chemist by trade yet you’re quite a businessman by practice. Correct?
Joe D’Cruz: Correct.
Matt Register: Tell me a little bit about that.
Joe D’Cruz: I spent 10 years at the DuPont company, doing a variety different jobs in electronics business, imaging business, digital business. Left that, did a startup and then jumped into telecom full, full, full bore as I was the GM of Nokia. And then I’ve done a series of different roles at large corporations and pure startups.
Matt Register: Wow. Well on a startup side, what is the one thing you see a lot of sort ups, how do people mess that process up? Because most of them are messed up, right? Most of them don’t, don’t ever actually…
Joe D’Cruz: Yeah.
Matt Register: You know, fully launch. Right?
Joe D’Cruz: Right.
Matt Register: What is the one thing that you guys are ensuring you don’t do. Right? That you see is a common mistake.
Joe D’Cruz: You know, it’s really about team, it’s about knowing what your business is, having a rigorous process and being able say “No go” really quickly.
Matt Register: Right.
Joe D’Cruz: Right. So when we look at building our team, we typically all interview somebody and make sure that they have the wherewithal to be able to deal with not only a big growth company but also that ebbs and flows of any kind of business.
Matt Register: Well that’s easier said than done. Right? You know we were talking to an HR guy not very long ago. And I promise you I have never on purpose hired knucklehead, yet I’ve hired a lot of knuckleheads.
Joe D’Cruz: Yes. Yes.
Matt Register: You do your best on that and the better you can do on it, the better you’re odds. Right?
Joe D’Cruz: So, yeah, to that point, what we have is, we have a bunch of these potential executives and technologists who are waiting for different products that were coming to market with that they have the expertise. So they actually worked for us for anywhere from three to 10 months at no charge. And we understand how they work. So they get to work with us hand-in-hand as we’re doing the due diligence, the market, the budget and the client sales and that’s how we basically validate are they the right person for the job.
Matt Register: Nope. Absolutely makes sense. Gives you a chance to go study before you get married as well. Right? All right, Catalyzed Dallas, Joe D’Cruz, founder and CEO. Joe thank you very much for joining us.
Joe D’Cruz: Thanks for the opportunity.
Matt Register: Somebody wants to learn more about Catalyzed Dallas, what is the easiest way for them to do that?
Joe D’Cruz: Phone call.
Matt Register: Phone call. Alright.
Joe D’Cruz: Yeah, they can call my personal number.
Matt Register: All right.
Joe D’Cruz: 469-939-2105.
Matt Register: All right, catalyzesDallas.com as well. Guys, we’re going to have links right there on Texasbusinessradio.com. So don’t worry about taking notes. We’re going to have it right there from the web site. But thank you very much for joining us. Fascinating conversation and good luck to you on your startups that you have in the pipeline right now.
Joe D’Cruz: Right. Thank you very much for the opportunity.
Matt Register: No worries. Guys, we got to take a break and pay a couple of bills. We’re going to be back. We’re just getting warmed up. We’re bringing you all kinds of companies from here at the Business Executive Summit at the… Where are we? We are at the Irving Convention Center at Las Colinas in Irving, Texas. Here for that summit. Awesome event. If you’re trying to grow your company in Dallas and you’re not here, you’re wrong. This is the place to be today. Guys we’re going to take a break. We’ll be back. Don’t go anywhere.
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In addition to hosting "Texas Business Radio," Matt is an investment banker and serial entrepreneur from Montgomery, Texas. He is the owner of RREA Media and Register Real Estate Advisors and a Managing Director and Principal at Corporate Finance Associates. He has a BS from the United States Military Academy at West Point and an MBA from Rice University in Houston. You can read more about Matt HERE.